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Deeper and Deeper

More bad news for the attorney general.

In early February 1984 E. Robert Wallach, a close friend and legal adviser of Edwin Meese, paid one of this occasional visits to the Bronx headquarters of the defense contractor Wedtech, a company that has since grown infamous for bringing and corrupting its way to fabulous success. Only a few weeks before, on January 23, President Reagan had announced the nomination of Meese to replace William French Smith as attorney general. Sitting in the office of Wedtech’s founded and chairman, John Mariotta, Wallach explained that his famous friend, a man of limited means, was unable to afford legal representation in what was likely to be a long and arduous confirmation process. And so Wallach, who for three years had been miraculously clearing a path for Wedtech through the thickets of Washington, offered the executives of the company a simple deal.

If you will pay me the cost of representing Meese, he said, according to testimony given by former Wedtech executives to independent counsel James McKay, you can feel certain that you will get the pontoon contract. Wedtech had been trying to get the Navy to award it $24 million contract to build pontoon bridges. The firm had received clearance under the Small Business Administration’s minority set-aside program to win the contract without competitive bidding. (Although the company’s shares were publicly traded, a series of complex stock arrangements allowed Mariotta—of an ethnic descent he liked to describe as “New York Rican”—to claim more than 50 percent control of the company.) Nevertheless, the Navy had only slowly and reluctantly inched toward awarding it the job.

Wedtech’s future was looking increasingly grim. The firm’s only other large assignment, a 1982 contract to build small engines for the Army, was peaking and phasing out. After some debate, the Wedtech executives agreed to pay Wallach $150,000. The check was drawn by Anthony Guariglia, vice president and chief financial officer.

On April 17 the Navy informed Wedtech that it had been awarded the contract. Wallach boasted that it was his influence on meese that had carried the day. It’s clear, in fact, that congressmen, SBA officials, and Wedtech’s lobbyist Lyn Nofziger had a lot to do with the decision. But if Meese was influenced by Wedtech’s payment to Wallach, Meese would be guilty of a gross violation of ethics-in-government laws—far worse than the infractions for which his former colleague Nofziger, also accused of peddling influence for Wedtech, is now being prosecuted in federal court in Washington. In some ways it might even be worse than Meese’s apparent role in the Iraqi oil pipeline near-deal, in which he seems to show his typical cronyism and gross negligence rather than greed. The Wedtech testimony suggests the possibility that Meese was trading government plus for personal financial benefit. The account that follows is based in part on information provided by legal sources familiar with Wedtech’s labyrinthine affairs.

Wedtech’s executives built a $100 million company out of the rubble of the Bronx not by building a better engine, but by bribing virtually everyone who could have helped them or hurt them. The company’s top officers have said so themselves. Several months after they had been indicted in 1986, Fred Neuberger, Mario Moreno, Lawrence Shorten, and Guariglia agreed to cooperate with the government, and began pouring out their litany of corruption to federal prosecutors, state prosecutors, and the independent counsel. (Mariotta refused to cooperate, and faces trial next month.) This information has begun to surface.

The group has accused most of the well-known politicians in the Bronx, figures in the Defense Department and SBA, and executives at the brokerage house Bear Stearsn and the Big Eight accounting firm of Main Hurdman of aiding and abetting their corrupt schemes. Wedtech seems to have been bent on proving that every man does have a price, and attorneys familiar with the case expect many more trials, criminal and civil, in the next several years. Testimony by Moreno and Guariglia has played a critical role in the convictions of Clarence and Michael Mitchell, Maryland state legislators who accepted money from Wedtech to influence a congressional inquiry into the SBA overseen by Representative Parren Mitchell, their uncle.

In 1981 Wedtech hired Wallach as a lobbyist, and began paying him lavishly, first in cash and then in stock. (Nofziger and his partner Mark Bragg began working for Wedtech the next year.) A Lawyer from San Francisco, Wallach had no inside track at the Pentagon. What he had to offer was his long friendship with Meese, going back to their days in law school at Berkeley. Wallach, by his own admission, sent a stream of memos to his old friend on the merits of the Wedtech bids, and Meese, then presidential counselor, was apparently quick to respond. In 1982, according to testimony at the Nofziger trial, Meese’s chief deputy, James Jenkins, virtually ordered the Army to award Wedtech the engine contract, then worth $32 million. It was not a subtle hint. What Jenkins said, one Wedtech executive told McKay’s office, was “ Cut the bullshit and award the contract.” At the Nofziger trial Meese acknowledged receiving several memos from Wallach about Wedtech in 1982, but said that he could not recall their content and did not act on them.

By the fall of 1983 Wedtech again needed some help. Acting Assistant Secretary of the Navy Everett Pyatt felt, as he told a congressional hearing into Wedtech’s lobbying efforts last fall, that the pontoon contract was too large and sophisticated to merit inclusion in the minority set-aside program. Wedtech went into its full-court press, calling on powerful friends in New York and Washington. Bragg spoke with Pyatt several times, according to a sworn affidavit from Mario Moreno. And Wallach reported, in his typical code, that he had spoken with “his friend” about Wedtech’s problems. He told Moreno that Meese had in turn talked to Defense Secretary Caspar Weinberger.

Pyatt’s resolve began to crumble. By mid-January he had become persuaded, he told the congressional hearing, that a minority firm should build the motorized causeways, and that Wedtech, despite its dismal physical plant, could do the job. Still, it was unclear what Wedtech would survive the hard negotiations on price and other issues that lay ahead, especially given Pyatt’s original opposition and his reputation for hardheadedness.

Wedtech and its lobbyists saw one promising angle. In June 1983 Pyatt had been appointed acting assistant secretary, yet it had become clear that the White House would not nominate him for the position. Secretary of the Navy John Lehman favored Pyatt’s appointment. But Lehman, now a managing director at Paine Webber, says the White House personnel office had been explicit that the assistantship was “a Presidential Level 4 appointment, and only a political appointee would be considered. Pyatt was a registered independent, and he was a career civil servant.”

The Wedtech officials who are cooperating with McKay’s investigation have offered two accounts of what happened at this point. According to one account, Wedtech executives, through Nofziger or Bragg, offered Pyatt a deal: they would secure his confirmation through their contacts in Washington, and he would award them the pontoon contract. The other account appears in an FBI memo based on conversations with Moreno, who, along with Mariotta, handled the company’s political entanglements. The memo, uncovered by the New York Daily News, identifies Lehman as the ultimate opponent of the Wedtech contract, and identifies the ubiquitous James Jenkins, who took a job with Wedtech later that year, as the man who “refrained from authorizing” Lehman’s nomination of Pyatt. “If Lehman dropped his opposition” to the Wedtech bid, the memo quotes Morena, Jenkins would let the nomination proceed.

Lehman insists that the Wedtech bid was too small for him to deal with. A govenrmetn soruce says that the former Navy secretary did meet with Nofziger, Wedtech’s lobbyist, before the awarding of the contract. But there is no evidence Lehman made any deal with Wedtech. On behalf of Pyatt, Navy spokeswoman Lt. Kippy Burns responds, “Secretary Pyatt never had any discussions with any Wedtech official concerning his nomination as assistant secretary of the Navy for shipbuilding and logistics.” Pyatt also told the congressional hearing that he had no contact with Bragg or Nofziger prior to awarding the contract, and there is no corroborating evidence that he did so.

But somebody or something unstuck the Pyatt nomination. On April 16, 1984, Everett Pyatt was nominated by President Reagan as assistant secretary of the Navy for shipbuilding and logistics. On April 17 Wedtech was notified it would receive the contract. What did the trick? Could it have been Meese, or his action arm, James Jenkins? “There’s always scuttlebutt and gossip,” says Lehman, who refused to comment further. A number of former high-ranking Navy officials failed to return repeated phone calls. One of Meese’s attorneys, James Rocap, says that Pyatt’s nomination had nothing to do with Wedtech, and adds that Meese knew only very generally of the pontoon bid, “presumably from Wallach.”

Meese never paid Wallach, or his other attorney, Leonard Garment, for their representation throughout 1984. The government did, however. In late March, a month after the confirmation hearings had begun, a different special prosecutor, Jacob Stein, was appointed to look into allegations that Meese had failed to include on financial-disclosure forms a $15,000 loan to his wife from one Edwin Thomas, and that he had used his influence with the White House personnel office to get three members of the Thomas family appointed to federal jobs. By the fall Stein had concluded that the information did not amount to an indictable offense, hearings resumed, and the Meese nomination was passed by the Senate in February 1985.

An amendment to the 1978 act governing special prosecutors provides that the government will reimburse reasonable legal expenses if no indictment is returned. Garment and Wallach submitted a bill for $720,000, a federal judge awarded Garment about $400,000 and Wallach about $70,000, and that, says Garment, “was the end of it.” The additional work of aiding Meese in the confirmation process, he says, was “written off as residual representation.” Wallach, it seems, was paid not once but twice for representing Meese—neither time by Meese himself.  

The missing link in this story, of course, is whether Meese knew that Wedtech had paid Wallach to represent him at his confirmation hearing. There’s no evidence he did. IN the end, no payment was needed since the government paid for the cost of Meese’s representation in the special prosecutor investigation, and the confirmation help was thrown in as a free extra. But in February and March 1984, while Wedtech’s bid still hung in the balance, Meese had no reason to believe that the government would pick up his tab.

Rocap, Meese’s lawyer, argues that there would have been no tab, since Meese was not formally represented during the hearings. But Wallach said at the time, and Meese adviser Tom Korologos confirms, that Wallach was acting as a legal adviser to Meese throughout the nomination process. Either Wallach was lying to Wedtech, and Meese fully intended to pay him, or the incipient attorney general knew he was getting something for nothing—from Wallach, if not from Wedtech. Meanwhile, Meese felt no apparent qualms about using his position in government to do Wallach valuable favors as well.

A more cautious man might have avoided Wedtech once he became the highest law enforcement officer in the land. Not Ed Meese. In May 1985 Wallach steered Meese to Wedtech financial consultant Franklyn Chinn for the investment of a $60,000 “limited blind partnership.” Chinn is currently facing racketeering charges for his role in Wedtech, along with Wallach and fellow financier Rusty Kent London. 

And it was only in 1985, oddly enough, that Meese met those wonderful Bronx contractors he’d been putting in a good word for all those years. Wallach, Nofziger, and Bragg had always served as the intermediaries. At the Ambassadors Ball late that year, according to one account, Wallach conveyed a party of Wedtech officials and wives over to the corner where Ed Meese and his wife, Ursula, were standing. Mrs. Meese saw them first and, without a word of introduction, burst out, “Oh, you must be the boys from Wedtech!” Ed Meese finally shook hands with his grateful beneficiaries. It must have been a beautiful moment.